Oct. 6 (Bloomberg) -- Liverpool’s board agreed to sell England’s most successful soccer club to John W. Henry’s Boston Red Sox holding company over the objections of owners Tom Hicks and George Gillett, who vowed to resist an offer they said is too low.
The board reviewed two offers yesterday, and accepted the one from New England Sports Ventures. It will pay about 300 million pounds ($476 million) for the club, Liverpool Chairman Martin Broughton said in an interview, adding he expected to deal to be completed in about a week.
The sale is subject to Premier League approval and a legal challenge from Hicks and Gillett. The owners said earlier today that the offers “dramatically undervalue the club” and they will “resist any attempt” to sell without their agreement.
“The board decided to accept NESV’s proposal on the basis that it best met the criteria we set out originally for a suitable new owner,” Broughton said in a statement on the club’s website. “NESV’s philosophy is all about winning and they have fully demonstrated that at the Red Sox.”
Boston-based New England Sports Ventures is the holding company for the Red Sox, Fenway Park and New England Sports Network. Henry, a commodities hedge-fund billionaire, bought the Red Sox in 2002 and the team won the World Series in 2004, ending an 86-year wait between baseball championships, and in 2007. The team missed the Major League Baseball playoffs this year for the first time since 2006.
“We have a proven track record, shown clearly with the Boston Red Sox,” NESV said in an e-mailed statement. “The team has won two World Series championships over the past six years. We will bring the same kind of openness, passion, dedication and professionalism to Liverpool FC.”
Broughton said the team’s sale against the wishes of the co-owners was a “difficult issue.” He said he hoped the necessary legal judgment to allow the deal to go ahead would be received “by the end of next week.”
“(Hicks and Gillett) gave a written undertaking that only I could change the board,” Broughton told Sky. “They also gave a written undertaking to RBS (lender Royal Bank of Scotland Group Plc) that they would not frustrate any reasonable sale, and this is frankly a flagrant abuse of those two written undertakings.”
Mark Semer, a spokesman for Hicks, disputed Broughton’s assertion.
“There were no such undertakings given to Broughton, the board has been legally reconstituted, and the new board does not approve of this proposed transaction,” Semer said in a statement.
Broughton was “disappointed that the owners have tried everything to prevent the deal from happening and that we need to go through legal proceedings in order to complete the sale.”
He said Liverpool would continue with plans to build a new stadium or refurbish its current home, Anfield.
“We will have a stadium of more than 60,000,” he said. “I don’t want any hostages to fortune, but the owners want the new stadium ready within a short time frame.”
Five-time European champion Liverpool, which won the last of its 18 English league titles in 1990, was put up for sale in April by Hicks and Gillett with debt totaling 351 million pounds. They bought the club in a leveraged buyout for 219 million pounds including debt in 2007.
According to Liverpool, NESV’s offer wipes out the acquisition debt. In April that figure was 237 million pounds, and had ballooned to 280 million pounds because of penalty fees linked to an extension granted to the owners by Royal Bank of Scotland Group.
NESV will pay down all the 200 million pounds Hicks and Gillett raised from RBS to buy the club. The remaining 37 million pounds will remain on the bank’s books in ongoing credit facilities.
“NESV wants to create a long-term financially solid foundation for Liverpool FC and is dedicated to ensuring that the club has the resources to build for the future, including the removal of all acquisition debt,” the company said. “Our objective is to stabilize the club and ultimately return Liverpool FC to its rightful place in English and European football, successfully competing for and winning trophies.”
Hicks and Gillett remain liable for the 40 million pounds in penalty fees and it’s unclear what will happen to the 144.4 million pounds loaned to the club by its current owners.
Hicks and Gillett, who said they’ve invested $270 million in cash since buying the club, faced a mid-October deadline to sell or refinance their 280 million-pound debt to RBS.
The government-controlled lender could have taken control of the club had a sale agreement not been reached.
Managing Director Christian Purslow, Commercial Director Ian Ayre and Broughton yesterday blocked a third attempt by the owners to refinance, three people familiar with the situation said. They declined to be identified because talks to sell the club were still in progress.
To try to wrest control of the sale, Hicks and Gillett attempted to remove Purslow and Ayre before yesterday’s board meeting and replace them with Mack Hicks and Lori Kay McCutcheon, who is vice president at Hicks Holdings LLC. Liverpool said late yesterday the matter was “subject to legal review.”
The U.S. co-owners’ tenure has been against the backdrop of protests by fans. Thousands of supporters marched before Liverpool’s last two home games.
The off-field discord has been accompanied by the team’s worst league start in more than half a century. That followed Roy Hodgson’s appointment as manager July 1 to replace Rafael Benitez after the Spaniard took the Reds to their lowest Premier League finish in 11 years.
Liverpool slipped to 18th place in the 20-team standings following a 2-1 home loss to Blackpool three days ago.
Last season’s seventh-place finish meant Liverpool failed to qualify for the Champions League, the first time it hasn’t been in the elite European competition since 2003-04, missing out on about 30 million pounds in revenue.
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